Judge: Stephen I. Goorvitch, Case: 19STCV43653, Date: 2022-09-12 Tentative Ruling

Case Number: 19STCV43653    Hearing Date: September 12, 2022    Dept: 39

JTX Group, Inc. v. Global Meat Federation, Inc.

Case No. 19STCV43653

Motion for Judgment on the Pleadings

Plaintiff JTX Group, Inc. (“Plaintiff” or “JTX”) filed this action against numerous defendants, asserting the following causes of action in the third amended complaint: (1) Breach of contract, (2) Breach of covenant of good faith and fair dealing, (3) Recission, (4) Implied-in-Fact contract/Unjust enrichment; (5) Money had and received, (6) Common counts – Moneys lent, (7) Negligent misrepresentation; (8) Promissory estoppel, (9) Breach of fiduciary duty, (10) Actual fraud, (11) Violation of Business and Professions Code section 17200, (12) Conversion, and (13) Violation of Penal Code section 496.  Defendants TD Capital, LLC, Medline Management Corporation, and Colony Capital, LLC (collectively, “Cross-Complainants”) filed a cross-complaint asserting causes of action for: (1) Intentional Misrepresentation/Aiding and Abetting, (2) Conversion, (3) Conspiracy to commit fraud, (4) Equitable indemnity, and (5) Contribution against Shing “Jacky” Lo.  The cross-complaint also asserts these causes of action against the following parties: (1) JTX, (2) Qingfu Xu, a/k/a Frank Xu (“Xu”), (3) H. Harry Aharonian (“Aharonian”), (4) Lily Lu a/k/a Yi Liu (“Liu”), (5) A&J Capital, Inc. (“A&J Capital”), and (6) Greenpeak Capital, LLC (“Greenpeak”) (collectively, the “Cross-Defendants”). 

The Cross-Defendants all demurred to the first, second, and third causes of action.  The Court sustained the demurrer to the first, second, and third causes of action in the cross-complaint.  (See Court’s Minute Order, dated June 10, 2022).  The Court granted leave to amend with respect to the first and second causes of action and ordered that a first amended cross-complaint shall be filed within thirty (30) days.  No amended cross-complaint was ever filed.

The following cross-defendants filed motions for judgment on the pleadings with respect to the fourth and fifth causes of action, which assert claims for equitable indemnity and contribution, respectively: (1) Xu, (2) Aharonian, (3) Liu, (4) A&J Capital, and (5) Greenpeak.  On August 23, 2022, the Cross-Complainants dismissed Xu and Greenpeak.  On August 30, 2022, the Cross-Complainants dismissed Liu and A&J Capital.  Therefore, the Court decides only Aharonian’s motion for judgment on the pleadings. 

A motion for judgment on the pleadings has the same function as a general demurrer, but may be made after the time to demur has expired. (Code Civ. Proc., § 438, subd. (f).)  “Like a demurrer, the grounds for the motion [for judgment on the pleadings] must appear on the face of the challenged pleading or from any matter of which the court is required to take judicial notice.” (Civic Partners Stockton, LLC v. Youssefi (2013) 218 Cal.App.4th 1005, 1013.)  In ruling on a motion for judgment on the pleadings, “[a]ll allegations in the complaint and matters upon which judicial notice may be taken are assumed to be true.” (Rippon v. Bowen (2008) 160 Cal.App.4th 1308, 1313.)

“Equitable indemnity is an equitable doctrine that apportions responsibility among tortfeasors responsible for the same indivisible injury on a comparative fault basis.”  (Fremont Reorganizing Corp. v. Faigin (2011) 198 Cal.App.4th 1153, 1177, citation omitted.)  “The equitable indemnity doctrine originated in the common sense proposition that when two individuals are responsible for a loss, but one of the two is more culpable than the other, it is only fair that the more culpable party should bear a greater share of the loss.”  (Ibid., citation and internal alterations omitted.)  “A right of equitable indemnity can arise only if the prospective indemnitor and indemnitee are mutually liable to another person for the same injury.”  (Ibid., citation omitted.)  In other words, to state a claim for equitable indemnity, the Cross-Complainants must demonstrate that they and Aharonian are mutually liable to Plaintiffs for the same injury, and Aharonian should bear a great portion of the liability.  The same is true with respect to a claim for contribution.  (See General Elec. Co. v. State of Cal. ex rel. Dept. Pub. Wks. (1973) 32 Cal.App.3d 918, 925.) 

The cross-complaint does not clearly allege that the Cross-Complainants and Aharonian were joint tortfeasors against JTX.  The Cross-Complainants argue that Aharonian—who was an agent of JTX—breached his fiduciary duty to JTX, which caused JTX to wire funds to TD Capital and to enter into the financial transactions forming the basis of JTX’s claims in this case.  This could be a viable claim, if the Cross-Complaints allege that their agents were working in concert with Aharonian to facilitate JTX wiring the funds and entering into the financial transactions at issue.  But the cross-complaint does not allege those facts.  At best, the cross-complaint alleges that Aharonian independently breached his fiduciary duty to JTX, which led to the claims against the Cross-Defendants.  This is not sufficient to state claims for equitable indemnity and contribution because it does not suggest that the Cross-Defendants and Aharonian were joint tortfeasors against JTX.

Based upon the foregoing, the Court orders as follows:

1.         All motions for judgment on the pleadings are taken off-calendar as moot except that filed by Cross-Defendant H. Harry Aharonian.

2.         The motion for judgment on the pleadings filed by Cross-Defendant H. Harry Aharonian is granted with leave to amend.

3.         The Cross-Defendants may file an amended cross-complaint within twenty (20) days.

4.         Counsel for Cross-Defendant H. Harry Aharonian shall provide notice and file proof of such with the Court.